Correlation Between Prime Meridian and Oconee Financial
Can any of the company-specific risk be diversified away by investing in both Prime Meridian and Oconee Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Prime Meridian and Oconee Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Meridian Holding and Oconee Financial, you can compare the effects of market volatilities on Prime Meridian and Oconee Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Prime Meridian with a short position of Oconee Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Meridian and Oconee Financial.
Diversification Opportunities for Prime Meridian and Oconee Financial
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prime and Oconee is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Prime Meridian Holding and Oconee Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oconee Financial and Prime Meridian is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Prime Meridian Holding are associated (or correlated) with Oconee Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oconee Financial has no effect on the direction of Prime Meridian i.e., Prime Meridian and Oconee Financial go up and down completely randomly.
Pair Corralation between Prime Meridian and Oconee Financial
Given the investment horizon of 90 days Prime Meridian Holding is expected to generate 6.74 times more return on investment than Oconee Financial. However, Prime Meridian is 6.74 times more volatile than Oconee Financial. It trades about 0.41 of its potential returns per unit of risk. Oconee Financial is currently generating about 0.31 per unit of risk. If you would invest 2,600 in Prime Meridian Holding on September 1, 2024 and sell it today you would earn a total of 300.00 from holding Prime Meridian Holding or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Prime Meridian Holding vs. Oconee Financial
Performance |
| Timeline |
| Prime Meridian Holding |
| Oconee Financial |
Prime Meridian and Oconee Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Meridian and Oconee Financial
The main advantage of trading using opposite Prime Meridian and Oconee Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Meridian position performs unexpectedly, Oconee Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Oconee Financial will offset losses from the drop in Oconee Financial's long position.The idea behind Prime Meridian Holding and Oconee Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Oconee Financial vs. Piraeus Bank SA | Oconee Financial vs. Turkiye Garanti Bankasi | Oconee Financial vs. Delhi Bank Corp | Oconee Financial vs. Uwharrie Capital Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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